FAQ – Declaring Bankruptcy

Can I travel internationally?

Yes. All you will want to do is apply to your bankruptcy trustee for permission to go. You’ll get it, however there is a one-page form you will need to fill in simply to inform the trustee of how long you will be taking a trip, etc. This regulation is really only there so high rollers don’t skip the country. Sometimes the trustee will request your passport, but don’t stress about it because you can request it back when you want to travel. Call us if you would like to know more about travel on 1300 795 575.

Can I keep my house?

In many cases the answer is yes! As a matter of fact, in many cases these days we can help you keep your home. At Bankruptcy Experts we are experts at guiding people keep their homes. It’s potentially very tricky, so if you are concerned about losing your house call us on 1300 795 575 and we will guide you through your alternatives.

The notion of losing the family home is probably the most common hindrance to people filing for bankruptcy. We speak with people day after day who have battled for many years under tremendous financial strain so they don’t lose their home.

So how is it possible to be bankrupt and keep your house? Simple, really; it’s a matter of equity. Let’s put it like this, if you own a house that’s worth $350,000 and you owe the bank $350,000 you in reality have no equity in the house, right? The trustee will only sell off your house if there is enough equity in the home if sold to pay back some of your debts. So in this particular situation, the trustee will then give you some options, one of which is to simply to continue paying the mortgage and live in the house while you are bankrupt.

So how can I discover the market value of my house? A straightforward way is to go onto realestate.com. au and look at the sold houses tab in the Cairns area and it will show you all the recent sales in your neighborhood. Another option, if you are not sure or are very concerned, is to have a registered valuer do a valuation on your home, not a real estate agent (unless they are registered valuers, of course). Be advised this will cost you somewhere between $300-700. Just another aspect of house prices. If the trustee wants to sell your house they do so reasonably quickly. It’s not a 6-month sleek promotional campaign and instead it’s normally by auction and they just meet the market on the day and that’s it. So when thinking about the value remember it’s a sell now price, not when the market improves.

Once you have figured out the resale value of your house the next thing to review is who owns the house.

Generally most home loans are between 2 people as joint tenants who both contribute to the home loan. If only one party is going bankrupt then the equity is worked out this way.

Say your home is worth $400,000 and the current price is $350,000. Then the remaining equity in the home is $50,000, right? Half of that total equity is automatically allocated to the party not going bankrupt, leaving $25,000 for the bankrupt. Out of that $25,000 the bankrupt party needs to pay for all of the selling costs including advertising etc., which, depending on where you live, can cost anywhere between $12,000-20,000. In this case say the selling costs are going to be $15,000 then the remaining left over after the sale is $10,000. So in this case the trustee will give the non-bankrupt party numerous options. One of which is typical is for the bank to say, “Pay us the $10,000 and we won’t sell the house and you will have it removed as an asset from the bankrupt’s estate.” Or, in other words, cut a deal to pay the $10,000 and you can keep your house.

Just a side note: the financial institution who has given you the mortgage loan will want the repayments to be continued of course. Regardless of what the trustee decides, if you don’t pay the lender the property loan they will ultimately ask you to move out. So, in other words, keeping the house obviously implies keeping the mortgage also.

There are plenty more options with your house, and we have just detailed one option of potentially 20 solutions you can select from, when it pertains to your house. We understand you need to get this correct. Gambling with the family home can possibly be a disastrous business. If you want to get the correct advice or you just want to talk to someone phone us on 1300 795 575.

When would my travel be restricted?

Your international travel would be prohibited by the trustee as a result of adverse legal action. For example, if your bankruptcy is a part of a criminal investigation or fraudulent activities, it’s possible the trustee will restrict your travel.

What happens to my credit ranking?

Bankruptcy lasts 3 years and will stay on your credit record for that time. However, as with any default it will be visible on your credit record for 7 years. You can have it removed if you get your bankruptcy annulled.

Will I ever be able to borrow money again once I’m bankrupt?

Bankruptcy lasts 3 years, and in that time you will not get a loan. After the 3 years is elapsed you will be able to get loans; you just won’t get the greatest rate. Your credit report will be wiped clean 4 years after you have been discharged as a bankrupt then you will have an excellent credit history again and you will get the most competitive deal on loans.

Will I lose my car if I go bankrupt?

Ordinarily no. Bankrupts almost never lose their cars because they’ve gone bankrupt. Of course, this is conditional and we can let you know if yours is safe. Call Bankruptcy Experts Cairns on 1300 795 575.

There is a threshold or amount of wholesale value your car can possibly be worth while you are bankrupt, which is $7,700. You will find all sorts of incorrect information about this on the internet, but here are the facts. That $7,700 represents not the total value; it represents equity. So, in other words, if you have a car worth $35,000 you are repaying or leasing and the amount you could sell it for is $30,000 then you can keep your car because its equity is only $5,000. The company that gave you the money for the car will be satisfied for you to keep the car even though you are bankrupt provided that you keep up the payments.

What if I’m overdue on my car payments and I go bankrupt; will they take my car?

Get some advice on this one. If you need some advice today just call 1300 795 575. Basically, you will get about 2 to 3 payments grace when it comes to car loans. The bottom line is simple: whether you are bankrupt or otherwise, if you miss 3 or more repayments on your loan they will repossess the car. Don’t assume because you are going bankrupt you are automatically going to lose your car because most of the time we help people keep them.

When are the creditors informed of my bankruptcy?

The creditors, or individuals you owe money to, are notified in writing at about the same time you receive your bankruptcy file notification.

Will anyone visit my house?

No. The bankruptcy process is ultimately a paperwork exercise. All that actually occurs is you will either be written to or emailed a letter informing you that you are bankrupt. At Bankruptcy Experts Cairns we make sure that this entire process is that straightforward, so if you have questions about this phone 1300 795 575.

Can I have my bankruptcy annulled?

Yes. This process will take about 2 weeks and will absolutely clear away the bankruptcy from your credit file. There are provisions within the Bankruptcy Act that enable a bankrupt person to have their bankruptcy annulled through a Section 73 proposal.

The consequences of creditor’s claims can often result in bankruptcy, irrespective regardless if it was the individual’s choice to enter bankruptcy, or if it was filed by a creditor. However, bankruptcy is far from the end of the world for the individual who undergoes bankruptcy.

We have been guiding people in the Cairns area for years so contact us today on 1300 795 575 to get some insight on this issue. We exercise the best possible course of action for you to get back up and running, minimizing residual effects and obstacles of past financial situations to give you the best possible result. Having experience and skills specialising in Section 73 proposals, we can combine this with our proven strategies and methods to bring you through bankruptcy in one piece, ready to start over.

Can I get my bankruptcy annulled?

Firstly, having your bankruptcy annulled is basically reversing it 100 %. So if you are thinking you would like to have your bankruptcy annulled there are a few things you need to know.

Firstly, how does the annulment actually work? A simple way to comprehend it is let’s say somebody owes you $50,000 and they haven’t paid you one cent back for many years. Then to make things worse you learn that they have filed for bankruptcy. You would kiss that cash goodbye, right? Many years go by and they approach you with an offer to repay you $5,000 that their father is offering to them to settle your debt with them. Naturally you are pleased to accept it, because it is better than a kick in the teeth. The only condition they ask for in return is that you agree to have the bankruptcy cleaned from their credit history, and if you don’t agree to do that then there will be no $5,000. Obviously you don’t care about their credit file; you are just grateful they are offering you some money after all these years.

In bankruptcy terms this procedure is usually described as a Section 73 proposal, and it’s an approach where “everybody wins.”.

Ultimately the trustee contacts your creditors, presents your offer, which is significantly less than the original amount owed, on the condition they wipe your credit history clean.

This technique takes a few weeks. The proposal could be done any time in the 3 years you are bankrupt. However, you have to bear in mind the timing of your proposal. Because it does cost money to do this, you need to ensure the odds are on your side. As an example, if you are paying back money to the trustee each week because you earn over the threshold amount, then your creditors will know they are going to get a certain amount from you over the 3 years regardless so it better be more than that will add up to.

If you have only been bankrupt 3 weeks it will be more challenging to get an annulment because they might get some income from you over the 3 years if you earn over the threshold sum of money.

If you want a helping hand to put a section 73 proposal to your trustee or just want more information about the timing of when to put an offer forward, just give us a call on 1300 795 575.

Can I go bankrupt if I’m already in a Debt Agreement or Personal Insolvency Agreement or in a Debt Consolidation Loan Contract?

Yes! We can help you finalise all of these agreements. With Debt Agreements and Personal Insolvency Agreements we need to have you released from them first before you file for bankruptcy, but it’s not a problem. If you are locked into one of these and simply can’t get on top give us call at 1300 795 575.

What debts won’t bankruptcy wipe out?

There are just a few debts that bankruptcy won’t 100 % remove, like Centrelink, child support, HECS and a court-imposed fine (speeding fines, etc.) and, finally, money owed to an insurance company as a result of a car accident in an uninsured car that you were driving.

Besides that, it will cancel things like your credit cards, store cards, GST and tax, unsecured personal loans, etc. In reality, there are way too many things to list so if you have a particular debt you are worried about just ask for a free consultation 1300 795 575.

Is there a limit to the amount of debt I can go bankrupt for?

You can’t file for bankruptcy for an amount less than $5,000; however, there is no limit beyond that. If you owe a couple million dollars, that’s treated no differently than $20,000.

What is the difference between a secured and unsecured debt?

An unsecured creditor is a creditor who does not have a hold over the chattels/assets/property purchased with the credit afforded to you. Such liabilities include credit card debts.

A secured creditor has a hold over the chattels/assets/property until the debt is paid out in full. If a debtor defaults on a secured liability, the creditor has the right to repossess and sell the chattels/assets/property to pay back the debt.

How can I make certain that you will be successful in making me bankrupt?

We have helped thousands of people declare bankruptcy for many years and we have never had anyone’s application rejected. That’s why we offer a 100 % money back guarantee.

Suppose I’m not completely sure who I owe money to?

There is an easy approach we use here, and all you need to do is get a copy of your credit file as it will have your entire credit history on there. Companies like www.veda.com.au will have the ability to get you a copy for a small fee.

I’ve had a car accident. Will the debt be covered in bankruptcy?

Vehicle accidents might be challenging, so to keep it simple call us on 1300 795 575 to get the right advice on your situation. However, as a general rule, if you were driving a vehicle that was not insured then the expense of the repairs is not wiped out with bankruptcy. Having said that, it depends who admitted liability or who was at fault. If you go to court and the court demonstrates you were not at fault then you should be fine.

Can I have business debts removed with my bankruptcy also?

Yes! We can help you carry this out, although it’s possible there are implications and plenty of regulations around this process, so call us and we will help you through the process on 1300 795 575. Bankruptcy Experts Cairns are specialists at helping businesses get back on their feet.

Can I pay out my bankruptcy debt and have it annulled?

Yes. There is an approach to follow, but if you win lotto or inherit some cash you can use it to get your slate wiped clean. There is a way of carrying this out properly; just give us a call first.

What if someone is bankrupting me; is there anything I can possibly do?

Generally, if you owe money to someone they can get a court order and bankrupt you. They have to follow a procedure, but it is feasible. What you need to avoid at all costs if possible is someone else bankrupting you, as it’s always best to voluntarily file for bankruptcy. Unless you enjoy court cases and annoying phone calls, of course.

What if my company has received a Demand or Wind-Up notice; can I still go bankrupt?

Yes. However, this is a challenging process and we suggest you get some qualified advice; if its handled incorrectly, it could be disastrous. For a free consultation phone Bankruptcy Experts Cairns 1300 795 575.

Do I need to contact my creditors?

No, we do that for you. Actually, we act as an intermediary or a midway point between you and your creditors. So ultimately you are not obligated to advise them of your bankruptcy; we take care of that for you.

How long does bankruptcy last?

3 Years.

How long does it take to file for bankruptcy?

Usually, it takes about 2 weeks.

What if someone else signed for a loan (joint loan or guarantor) and I go bankrupt; will they still be liable for the debt?

Yes. Typically a lender will pursue the other person who signed the loan documents with you for the sum total of the remaining money owing on the loan.

What happens to a debt I forgot about at the time of becoming bankrupt?

Don’t panic! If you overlooked a debt and remember it later, just speak to your trustee with the name of the creditor, address, date the debt was acquired, amount of debt and any account or reference number/s supplied by the creditor. Your trustee will add the creditor to your bankruptcy and send out a notification to the creditor.

Do I have to go to court if I go bankrupt?

No. We deal with the entire process for you.

What if I have gambled a bit of my money and I go bankrupt; will I get in trouble?

Typically this is not a problem, so if you are a gambler, don’t worry. What the trustee doesn’t like is inconsistency here. In other words, you have never gambled in your life and all of a sudden you lost $50,000 on the ponies, then you might have some explaining to do, of course, because it just doesn’t add up.

Can my bankruptcy be carried out the phone?

Yes. We appreciate you are busy. If you have a phone we can help you; simply call us on 1300 795 575.

What if I’m living abroad; can I still go bankrupt?

Yes. This is possible. It requires some emails to and fro but it can be performed.

Can I include my overseas debts in my bankruptcy?

Yes. If an individual originally living in another country now residing in Australia files for bankruptcy and they have a debt incurred in that foreign country, you just register that debt on the paperwork.

In most cases the creditor overseas will wipe out the debt. It is possible and legal for them, however, to reject your application, and if you return to that country you may be subject to their bankruptcy laws.

How will the trustee know what assets I have?

There are a few ways the trustee can discover, and the best and easiest way is for you to inform them when we do the paperwork. There is also a government website which has major assets listed also. You have to get some advice about assets; be careful.

Can I keep an inheritance if I file for bankruptcy?

This is tricky and you will want the correct guidance, so if you need more information about inheritances call us on 1300 795 575.

Will I lose my Pension or Workers Compensation payments if I file for bankruptcy?

No. The income thresholds are the same for everyone so no matter how you earn your income you have to earn about $50,000 per year before your income will be impacted by bankruptcy.

Will I be able to keep my income tax return once I’m bankrupt?

Yes, if you owe the Australian Tax Office money. Put simply, if none of your debts is tax debt, then no, the Australian Tax Office will keep the cash you owe them.

No, if you don’t owe the ATO money. Your tax return is considereded take-home pay, so if you are below the threshold amount you can earn while bankrupt then you will get your whole income tax return back.

What about my child support obligations ?

If you need to pay child support, this amount will be deducted from your net income, so what you have the ability to keep after you pay your tax and then child support is considered net income. That is why in the world of bankruptcy net income numbers are always quoted.

Can I buy shares and make investments while I’m bankrupt?

Yes, you are permitted even while you are bankrupt, but the trustee will get them off you, as they are considered an asset.

What assets can I keep if I go bankrupt?

You can keep almost everything except big things like houses, cars, shares and inheritances. Even things like houses and cars may be able to be saved. Just phone us before you make any rash decisions on 1300 795 575 for Bankruptcy Experts Cairns.

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What you MUST know before You declare yourself BANKRUPT

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We have been aiding people and companies file for bankruptcy in Cairns for years. If you would like a cost-free consultation, simply give us a ring on 1300 795 575. We are very competitively priced, offering a complete bankruptcy service from $495 for the entire 3 years you are bankrupt.

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